Public finance plays a huge role in national economic and social development. As the development of socialism with Chinese characteristics has entered a new era, productive research of public finance is urgently needed to provide academic support for the modernization of the national governance system and governance capabilities.

Wang Dehua, a research fellow from the National Academy of Economic Strategy at the Chinese Academy of Social Sciences, said that public finance in China and its development is in a critical period in relation to the establishment of a sound discipline system. In recent years, academic circles have discovered that the work of managing and balancing government revenue and government expenditure has penetrated all aspects of the national governance system. Public finance has started to integrate with disciplines such as labor economics, health economics and industrial economics to scientifically assess the impact of fiscal revenue and expenditure policies. Researchers of public finance combine international experience with local investigation to conduct policy-oriented studies on practical issues such as national fiscal and taxation policies, budget management and fiscal management. In addition, given the special importance of China’s local governments in the process of national reform and development, a large number of academic papers have begun to focus on China’s fiscal relations connecting governments at different levels and potential incentives for local officials.

Qiao Baoyun, director of the China Academy of Public Finance and Public Policy at the Central University of Finance and Economics, said that after several generations of unremitting efforts, China’s public finance has formed a discipline system that can be considered relatively complete, with distinct features of practicality, normalization and innovation. At present, the research of some Chinese scholars into public economics has received widespread attention from international academic circles. These scholars are good at condensing normative public economic theories and policies from Chinese practices, and they have become an important force in advancing the study of public finance worldwide.

Fang Hongsheng, deputy dean of the School of Economics at Zhejiang University, said that in terms of scientific research, the pace of studies on the reform of fiscal relations between central and local governments has been slow, and the construction of a socialist fiscal theory with Chinese characteristics needs to be strengthened. In addition, weak research on digital public finance can’t really play a substantial role in advancing the modernization of the national governance system and governance capabilities and serving the strategy of strengthening the country through human resource development.

“The modern fiscal system is an integral part of socialism with Chinese characteristics. Continuing to deepen the reform of the finance and taxation system and establish a mature modern fiscal system is an important task for promoting the modernization of the national governance system and governance capabilities,” said Xie Zhenfa, a professor from the Department of Public Economics at Xiamen University. He added that this task determines the key and difficult issues that need to be solved in China’s current public finance climate, including how to build a modern fiscal system to advance the modernization of the national governance system and governance capabilities, how to improve tax sharing systems, transfer payment systems and local main tax category systems, and how to analyze and summarize the performance and experience of China’s poverty alleviation work with the use of special fiscal funds.

At present, public expenditure, as an important method to achieve the goals of national governance, bears increasingly greater responsibility in improving national well-being. Ni Zhiliang, director of the School of Economics at Nankai University, said that public goods provided by public expenditure for all members of society reduce dissatisfaction caused by the Bandwagon Effect. Furthermore, after social products that are used for personal consumption are enhanced, people’s demand for basic public services such as health, education and a clean environment will grow, and these needs become increasingly important factors that affect an individual’s level of happiness and contentment. The improved supply of public goods and services provided by governments can greatly enhance national wellbeing, and this effect is even greater than the effect inspired by increased productivity and economic growth. Therefore, public finance scholars should conduct more in-depth research on “happiness economics” that concerns people’s livelihoods.

Fang added that at present, we should focus on fiscal relations between governments at different levels, socialist fiscal theory with Chinese characteristics and digital public finance. We should also build a high-level interdisciplinary research team to an international standard, which can submit high-quality policy recommendations that center on these three research directions to central and local governments.